Seeking solutions for IT firms during economic crisis
–Steve Wagner is Managing Director at Fair Web Solutions. The opinions expressed are his own.-
There can be no doubt that the recent global financial crisis has affected all areas of the economy and even though initially the likes of manufacturing companies and property development companies appeared to be the most affected, every business has had to take notice and consider what initiatives they can put in place to minimise the damage.
So what impact has this had on both internet and software development? And should businesses be scaling back investment in these areas or be looking to make strategic advances through continuing investment?
Since the dot-com bubble burst the internet has enjoyed continued growth in both technological advancements and global exposure with more people than ever having access to fast internet via broadband.
Further to this, data on browsing habits has demonstrated that consumer confidence in all the key demographics has also grown to the point where internet banking, social networking, streaming media, blogging, podcasts, mobile applications and wireless have embedded themselves firmly into many consumers everyday lives.
This transition from traditionally offline to online transactional activities has resulted in continued growth in demand and remuneration for web-based professionals such as developers, designers and marketing specialists (SEO, PPC, etc.) which has seen little impact to date from the current economic climate.
Whether this continues remains to be seen but, given that the evolution of the web is showing no signs of slowing and is instead enjoying one of the most exciting periods of transition, there is justifiable evidence to be positive.
Also, more and more companies of all sizes are looking to the web to provide extra benefits such as cost-effective methods for attracting new customers, abilities to distribute products to new customers who might otherwise not engage naturally with them because of location barriers and streamlining of business-to-consumer communication.
Similarly, software development has also benefited both online and offline from the surge of innovation as companies seek efficiency benefits from more powerful administration tools, enhanced CRM systems, reporting and alert systems, mobile systems etc.
Given that it is widely accepted that it is much more cost-effective to retain an existing customer than attract a new one, companies are utilising software enhancements to maximise customer retention and develop more targeted online and offline marketing strategies.
Alongside the immediate benefits a company can achieve, there are also longer term strategies such as brand development, customer loyalty, social innovations to name but a few which companies are increasingly realising they need to focus on.
If you think of the top brands consumers engage with on a daily basis, the vast majority of these have undergone rebranding exercises at least once recently and many are changing more subtly on a regular basis.
All of the above activities require technical investment yet these companies are clearly committed to the advantages that can be gained and as a result the industry has remained strong. This is because it has a more localised economy which is much more affected by technical advancements than the financial climate.
At this point I need to acknowledge that the industry has obviously not survived completely unscathed; there have been casualties. Some smaller companies especially will have simply struggled to continue this investment line at the same rate and as a result there will be some smaller development houses or sole traders who will undoubtedly have been affected.
Also, some larger companies in certain sectors are working on such strict financial business models that they will also have had to make some tough decisions.
Nevertheless, whilst the economy is cyclical and many businesses may feel both the rise and fall in traditional ways, when combined with the evolutionary growth of the web this provides a fascinating relationship.
In periods of strong economic growth, businesses are able to focus investment on extending or updating their web presence to capture new clients or increase order levels, whereas in periods of economic adversity companies are able to focus more on efficiencies that can be achieved using the web or software.
Any form of economic condition can provide a web opportunity and those companies who realise this and capitalise on these benefit the greatest.
One of Fair Web Solutions largest financial sector clients is a great testament to this. As a direct result of the crisis, the primary revenue streams for the company were negatively affected.
Rather than simply scaling back and remaining dormant to try and ride out the storm, they sought opportunities that had arisen from the crisis.
Eighteen months on, and the primary revenue streams have now shifted completely to areas that were previously not viable and the company is enjoying strong growth in an area that could not have realistically been contemplated some time ago due to the infancy of the web.
This positive transition was due to the progressive approach of this company and their commitment to intelligent technical investment.
Perhaps I should finish by re-iterating that the evolution of the web has taken on a new momentum and this can provide many more strategic opportunities that companies simply cannot ignore.
If you are company which is currently considering “Can we afford to continue technical investment at the same level in this climate?”, maybe you should really be asking “Can we really afford not to?”